The market sees red. While many were hoping for a price rebound to the $40,000 level, North American tech stocks are dragging Bitcoin (BTC) down and causing a wave of selling in weaker hands. On-chain analysis of the situation.

Bitcoin is heading towards $30,000

Following a bloody weekend, the price of bitcoin (BTC) invalidated the support at $40,000 and entered an area of ​​low liquidity conducive to volatility.

This drop, partly due to the strong correlation between traditional markets and BTC since September 2021, maintains the climate of uncertainty about a resumption of the rise in the short term. How low will the price go?

BTCUSD 250122

Bitcoin (BTC) price daily chart

This week, we will analyze the footprints left on the chain following the recent crash to gain insight into participant behavior at this late stage of the correction.

First gauging the extent of on-chain losses before observing how exchange reserves reacted to selling pressure, we will observe the maturation dynamics of BTC to conclude this analysis by covering the rise of the markets . derivatives .

Weak hands take heavy losses

Judging by the percentage of supply in a profit state , the ongoing bearish trend in bitcoin leaves a third of the participants in a loss state.

If fewer holders are profitable today than at the low point of the May 2021 capitulation, it is because many entities acquired BTC in November , at a price above $ 60,000, at a point high risk.

BTC % Profit 250122

Graph of percentage of BTC in profit state

Indeed, this moment corresponds perfectly with the profit taking of some LTH at the end of November, who, while more than 90% of BTC were profitable, decided to bequeath part of their capital to new entrants and to collect their gains. .

It is therefore over the past three months that these STHs have gradually sold their BTC at a lower price, going so far as to record losses of around one billion dollars daily.

BTC Losses 250122

Realized Loss Graph

While the loss taking is decreasing and converging with the gains made for several weeks, the break from the bottom of the $40,000 support has caused a wave of panic on both the spot market and the derivatives markets.

This resurgence of the “ pain ” experienced on the channel is particularly visible via the LVR ratio , the value of which indicates a loss worthy of strong corrections such as that which occurred at the beginning of December.

BTC RLV 250122

RLV ratio graph

Providing an excellent reversal signal in the event of a capitulation, this indicator will be one to watch closely if BTC accentuates its fall and reaches the $30,000 level .

The negative profitability is also felt on the aSOPR , which plunges for good into negative territory, a sign that the BTC sold this weekend were well below their base cost .

BTC aSOPR 250122

aSOPR Chart

Now below the neutrality threshold (aSOPR = 1), the expense profit ratio will have to test it upwards and then break free to indicate a complete trend reversal and a return to overall market profitability.

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